Coronavirus is probably the #1 concern in investors' minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards National Retail Properties, Inc. (NYSE:NNN).
Is National Retail Properties, Inc. (NYSE:NNN) going to take off soon? Money managers are in a bullish mood. The number of long hedge fund positions rose by 2 in recent months. Our calculations also showed that NNN isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). NNN was in 23 hedge funds' portfolios at the end of the fourth quarter of 2019. There were 21 hedge funds in our database with NNN holdings at the end of the previous quarter.
To most traders, hedge funds are seen as underperforming, outdated financial vehicles of years past. While there are over 8000 funds in operation at the moment, Our experts hone in on the elite of this group, around 850 funds. These money managers watch over bulk of the hedge fund industry's total asset base, and by keeping an eye on their first-class investments, Insider Monkey has come up with numerous investment strategies that have historically outstripped the market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
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Philippe Laffont of Coatue Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Now we're going to take a glance at the recent hedge fund action regarding National Retail Properties, Inc. (NYSE:NNN).
What does smart money think about National Retail Properties, Inc. (NYSE:NNN)?
At Q4's end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the third quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in NNN a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in National Retail Properties, Inc. (NYSE:NNN) was held by Citadel Investment Group, which reported holding $66.9 million worth of stock at the end of September. It was followed by Millennium Management with a $59 million position. Other investors bullish on the company included Balyasny Asset Management, Echo Street Capital Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position BlueMar Capital Management allocated the biggest weight to National Retail Properties, Inc. (NYSE:NNN), around 1.46% of its 13F portfolio. Echo Street Capital Management is also relatively very bullish on the stock, dishing out 0.55 percent of its 13F equity portfolio to NNN.
As one would reasonably expect, some big names were breaking ground themselves. Paloma Partners, managed by Donald Sussman, initiated the most valuable position in National Retail Properties, Inc. (NYSE:NNN). Paloma Partners had $7.4 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $3.8 million position during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, Ran Pang's Quantamental Technologies, and Philippe Laffont's Coatue Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as National Retail Properties, Inc. (NYSE:NNN) but similarly valued. We will take a look at US Foods Holding Corp. (NYSE:USFD), Carlisle Companies, Inc. (NYSE:CSL), Iron Mountain Incorporated (NYSE:IRM), and AEGON N.V. (NYSE:AEG). All of these stocks' market caps match NNN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position USFD,37,1278945,-9 CSL,26,406012,-8 IRM,17,42090,1 AEG,6,29963,-1 Average,21.5,439253,-4.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $439 million. That figure was $276 million in NNN's case. US Foods Holding Corp. (NYSE:USFD) is the most popular stock in this table. On the other hand AEGON N.V. (NYSE:AEG) is the least popular one with only 6 bullish hedge fund positions. National Retail Properties, Inc. (NYSE:NNN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately NNN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NNN were disappointed as the stock returned -29.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.